Accruals quality, managers’ incentives and stock market reaction: evidence from Europe

Cerqueira, António; Pereira, Cláudia

doi:10.1080/00036846.2016.1221047

Cited by 9 publications

(6 citation statements)

References 45 publications

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“…Current literature on AIQ primarily delves into internal and external corporate governance factors, yielding significant findings. Internal governance aspects like equity structure (Beasley, 1996), internal control (Lashgari et al, 2015) and management incentives (Antonio, 2016) Nevertheless, this body of research primarily uses single indicators to gauge AIQ, lacking a comprehensive examination of factors impacting it holistically. Furthermore, the impact of FSSCs on AIQ remains an unexplored domain in existing literature.…”

Section: Theoretical Analysis and Research Hypothesesmentioning

confidence: 99%

“…Current literature on AIQ primarily delves into internal and external corporate governance factors, yielding significant findings. Internal governance aspects like equity structure (Beasley, 1996), internal control (Lashgari et al , 2015) and management incentives (Antonio, 2016) significantly affect AIQ. External governance factors such as audit services (Shujah-Ur- Rahman et al , 2023), accounting reform (Abdul-Baki et al , 2019), corruption culture (Chen et al , 2020) and the application of internet of things and blockchain technologies (Wu et al , 2019) also exert considerable influence.…”

Section: Theoretical Analysis and Research Hypothesesmentioning

confidence: 99%

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Influence of the financial shared service center on the quality of accounting information

Zhang

2024

RAF

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Purpose This research endeavors to assess the influence of financial shared service centers (FSSCs) on the quality of accounting information within China’s A-share listed companies. Using a multi-period difference-in-differences (DID) model, the study aims to empirically examine the correlation between the adoption of FSSCs and the quality of accounting information. Design/methodology/approach The study uses a robust methodology to evaluate the relationship between FSSCs and accounting information quality (AIQ). Leveraging the established FSSCs within China’s A-share listed companies as the treatment group, this research adopts a multi-period DID model. This approach enables a rigorous empirical examination of the influence exerted by FSSCs on the overall quality of accounting information. Findings The present study delves into the impact of FSSCs on AIQ and conducts empirical analysis using data from Chinese A-share listed companies between 2004 and 2021. The findings substantiate that: FSSCs significantly bolster the quality of accounting information, a conclusion retained even after robustness tests. Specifically, FSSCs exhibit a positive correlation with the comparability, timeliness and disclosure quality of accounting information while demonstrating no significant influence on relevance, robustness and reliability factors. Research limitations/implications First, the analysis primarily rests upon data from Chinese A-share listed companies between 2004 and 2021, potentially constraining the generalizability of findings across diverse contexts. Second, despite controlling for various factors, unobserved variables or external factors not encompassed in the model might influence the relationship between FSSCs and AIQ. Additionally, the study’s reliance solely on quantitative data confines exploration into qualitative aspects that might offer a more comprehensive understanding of FSSCs’ impact on AIQ. Practical implications This paper establishes a nuanced connection between FSSC operations and AIQ, furnishing direct empirical evidence for their economic implications and propounding a novel avenue for augmenting AIQ. And, it furnishes guidance for forthcoming FSSC development, accentuating the necessity of harnessing information technology to enhance the relevance, reliability and robustness of accounting information. Originality/value Majority of prior empirical studies assessing AIQ have focused on singular indicators, lacking a comprehensive depiction of its overall level. To address this gap, this paper pioneers the construction of a comprehensive index for AIQ, providing a holistic representation of its level. Furthermore, this study stands as the inaugural investigation into the relationship between China’s A-share listed firms’ FSSCs and the quality of accounting information.

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Section: Theoretical Analysis and Research Hypothesesmentioning

confidence: 99%

“…Current literature on AIQ primarily delves into internal and external corporate governance factors, yielding significant findings. Internal governance aspects like equity structure (Beasley, 1996), internal control (Lashgari et al , 2015) and management incentives (Antonio, 2016) significantly affect AIQ. External governance factors such as audit services (Shujah-Ur- Rahman et al , 2023), accounting reform (Abdul-Baki et al , 2019), corruption culture (Chen et al , 2020) and the application of internet of things and blockchain technologies (Wu et al , 2019) also exert considerable influence.…”

Section: Theoretical Analysis and Research Hypothesesmentioning

confidence: 99%

Influence of the financial shared service center on the quality of accounting information

Zhang

2024

RAF

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“…Therefore, in the case of countries with developed equity markets, with corporate dispersed ownership, there is a demand for high quality public information because financial statements play a crucial role in reducing information asymmetries between firm insiders and outside equity investors (Cerqueira & Pereira, 2017;LaFond & Watts, 2008). In this context, accounting conservatism is demanded by shareholders because it reduces managers' opportunities to manipulate accounting numbers and reduces information asymmetries (Francis et al, 2013;Givoly et al, 2010;LaFond & Watts, 2008;Ball & Shivakumar, 2005;Watts, 2003).…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

Accounting conservatism and economic conditions: Evidence from the GIPS and the UK

Pereira

Cerqueira²

2023

Rev. contab.

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In this article we analyse whether the level of conservative accounting practice is associated with economic conditions in Greece, Ireland, Portugal, Spain (GIPS) and the UK. For that purpose, we study conditional conservatism surrounding the 2007/08 global financial crisis, using an approach that consists in examining two stages of the crisis, which we denote by the earlier stage of the crisis and the later stage of the crisis. Furthermore, we analyse the impact of the intensity of economic changes and institutional factors by comparing conservatism in the GIPS, which were more severely affected by the crisis, with the UK. The results are consistent with a conservative accounting practice in those countries over the sample period from 1998 to 2018. Besides, we find evidence of a decrease in conservative accounting in the earlier stage of the crisis and an increase in the later stage. In addition, the results suggest an incremental sensitivity of conservatism in countries that were more severely affected by financial crisis. Our findings are consistent with managers adjusting financial reporting in response to the economic environment, sometimes they appear to respond to the demand for a conservative practice from stakeholders, but other times they act as if they wanted to mislead outsiders. Therefore, this study brings some insights to the debate about the use of accounting conservatism and its relation to economic conditions. En este artículo se analiza si el nivel de práctica contable conservadora está asociado con las condiciones económicas de Portugal, Irlanda, Grecia y España (PIGS) y el Reino Unido. Para ello, se estudia el conservadurismo condicional en torno a la crisis financiera global de 2007/08, utilizando un enfoque que consiste en examinar dos etapas de la crisis, que denotamos como la etapa anterior a la crisis y la etapa posterior a la crisis. Además, se examina el impacto de la intensidad de los cambios económicos y de los factores institucionales comparando el conservadurismo en los países PIGS, que se vieron más afectados por la crisis, con el Reino Unido. Los resultados son consistentes con una práctica contable conservadora en esos países durante el periodo de muestra (de 1998 a 2018). Además, se encuentran evidencias de una disminución de la contabilidad conservadora en la primera etapa de la crisis y un aumento en la etapa posterior. Además, los resultados sugieren una sensibilidad incremental del conservadurismo en los países que se vieron más gravemente afectados por la crisis financiera. Los resultados son coherentes con el hecho de que los gestores ajustan la información financiera en respuesta al entorno económico; a veces parecen responder a la demanda de una práctica conservadora por parte de las partes interesadas, pero otras veces actúan como si quisieran engañar a los agentes externos. Por tanto, este estudio aporta algunas ideas al debate sobre el uso del conservadurismo contable y su relación con las condiciones económicas.

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“…High accruals quality implies high FRQ (Barth, Landsman, Lang, & Williams, 2012; Chen, Tang, Jiang, & Lin, 2010). Accrual quality indicates FRQ effectively because entities with poor FRQ exhibit high information asymmetry and this association is stronger for entities with low accruals quality (Cerqueira & Pereira, 2017).…”

Section: Literature Reviewmentioning

confidence: 99%

Prioritizing and Establishing Cause and Effect Relationships Among Financial Reporting Quality Metrics

Himanshu

Singh

Kumar

2020

Vision: The Journal of Business Perspective

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Despite the widespread use of financial reporting quality (FRQ) metrics, the literature provides little evidence regarding the prominence and causal relationships among them. The article provides empirical evidence on prioritizing FRQ metrics and examining the causal relationships among them. Through extensive literature review and expert inputs, 12 FRQ metrics were finalized and analysed using the Decision-Making Trial and Evaluation Laboratory (DEMATEL) method. India, a developing country, was selected for empirical study. Empirical results indicate that opinion in auditors’ report is the most prominent metric to examine FRQ, followed by value relevance in the context of fair value accounting. A formal scientific categorization of the metrics into cause and effect groups has also been attempted. The causal relationships among FRQ metrics and their relative prominence would help in interpreting empirical studies, which employ these metrics. The study suggests that the stakeholders can focus on prominent FRQ metrics to examine FRQ of the reporting entity before taking their decisions.

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Accruals quality, managers’ incentives and stock market reaction: evidence from Europe

Cited by 9 publications

References 45 publications

Influence of the financial shared service center on the quality of accounting information

Influence of the financial shared service center on the quality of accounting information

Accounting conservatism and economic conditions: Evidence from the GIPS and the UK

Prioritizing and Establishing Cause and Effect Relationships Among Financial Reporting Quality Metrics

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